Did you know that it’s now officially illegal in the U.S. for telemarketers to take payment using traditional cash-to-cash money transfers (the type provided by companies like Western Union and MoneyGram), stored value cards (such as greendot), or remotely created checks (where a consumer reads their bank account info over the phone and the company prepares a paper check to send through the system)?

These new rules can help people avoid scams — if people come across these methods of payment, they’ll know it’s categorically illegal and therefore fraud. See the Federal Trade Commission’s recent announcement for more information…

New Banned Payment Methods Now In Effect

The FTC told companies last fall about impending prohibitions under the Telemarketing Sales Rule (TSR) on certain payment methods that legitimate telemarketing businesses don’t use, but con artists have been known to exploit: remotely-created checks, remotely-created payment orders, cash-to-cash transfers, and cash reload mechanisms. Well, as of June 13, 2016, these prohibitions are in effect.
The changes to the TSR will stop telemarketers from dipping directly into consumers’ bank accounts through checks and payment orders that have been remotely created by the telemarketer or seller. Since they’re remotely created, they’re never actually signed by the account holder – and that makes it easy for telemarketers and sellers to dip directly into consumers’ bank accounts. And it’s then hard to reverse the transactions with consumers’ banks (again, a reason why con artists love using these methods).

In addition, with the updated rule in place, telemarketers now can’t get payments through traditional cash-to-cash money transfers – the type provided by companies like MoneyGram and Western Union. Scammers use these cash transfers as a quick, anonymous, and irrevocable way to get money from consumers. Once the seller picks up the transfer, the money is gone.

The TSR changes also prohibit telemarketers from accepting as payment cash reload PIN numbers. That means no requests for payment by using MoneyPak, Vanilla Reload, or Reloadit packs, used to add funds to existing prepaid cards. Because scammers use the cash reload PIN numbers to apply the funds to their own prepaid debit cards – and disappear with the money. Except not anymore, under the updated TSR.

About Karen Fletcher

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.

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